Premier Announces Additional Cash-Flowing Royalty Purchase Agreement by its Subsidiary Premier Royalty Corp. Engages Financial Advisor Shares Issued: 137,431,855 THUNDER BAY, ON, May 24, 2012 /CNW/ - Premier Gold Mines Limited (TSX: PG) ("Premier") is pleased to announce the signing of a Definitive Purchase Agreement ("the Agreement") regarding the sale by Golden Arrow Resources Corporation ("Golden Arrow") and purchase by Premier's wholly-owned subsidiary, Premier Royalty Corporation ("Premier Royalty"), of Golden Arrow's 1% NSR on Yamana Gold's Gualcamayo Gold mine (the "Royalty"). Pursuant to the terms of the Agreement, Premier Royalty has agreed to purchase 100% of the shares of Golden Arrow's wholly-owned subsidiary which indirectly owns the Royalty for cash consideration of $16,500,000 and warrants to purchase an aggregate of up to 1 million shares of Premier Royalty at an exercise price equal to 120% of the price of Premier Royalty's shares in connection with an initial public offering or similar going public transaction. The warrants will be exercisable for a period of 24 months from the closing date of the Royalty acquisition. Golden Arrow will have the right, on 30 days' prior written notice, to require Premier Royalty to purchase for cancellation all outstanding warrants for a price of $1.25 per warrant at any time prior to their expiry. The Closing Date of the transaction is expected to occur in the third quarter of 2012 and is subject to closing conditions typical for a transaction of this nature, the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange and approval by the shareholders of Golden Arrow. Golden Arrow will hold a special meeting in July, 2012 for its shareholders to vote on the sale of the Royalty. As in the previously announced acquisition of royalties from Aberdeen International Inc., Premier intends to provide a bridge loan to Premier Royalty, if required, for the Royalty purchase from Golden Arrow. The bridge loan will be repaid by Premier Royalty with interest following a "go public" event. Consistent with Premier's strategy to expand its portfolio of royalty assets and maximize value for shareholders, Premier has engaged CIBC World Markets Inc. as its financial advisor to assist in considering acquisition and financing alternatives in relation to the Premier Royalty portfolio going forward. Premier is planning to take Premier Royalty public during 2012. The Gualcamayo mine is an open pit, heap leach gold mining operation with three substantial zones of gold mineralization, located in the northern San Juan province of Argentina, which hosts total proven & probable mineral reserves of 2.2 million oz. and total measured & indicated mineral resources of 1.1 million oz. as at December 31, 2011. Gualcamayo has consistently improved its production versus guidance and is on-track to meet or exceed guidance since 2011. According to Yamana's public disclosure, the decision was made in 2010 to develop the underground QDD Lower West deposit, located below the main open pit, which is expected to increase annual production to over 200,000 ounces per year beginning in 2014. Abraham Drost, Chairman of Premier Royalty stated that "We are very pleased to add another high quality cash-flowing royalty on a relatively new producing gold mine operated by a proven operator, to our portfolio of royalty assets. The Company continues to assess additional royalty acquisitions and other corporate development opportunities as part of an ongoing effort to optimize shareholder value. The engagement of CIBC World Markets Inc. as financial advisor will be of considerable assistance in this regard". Information in this press release describing the Gualcamayo Gold Mine relies upon public disclosure provided by Yamana Gold Inc. and has been reviewed by Mr. Stephen McGibbon, P. Geo, who is a Qualified Person within the meaning of National Instrument 43-101. For more information on the Gualcamayo Gold Mine, please refer to the "Technical Report for Gualcamayo Project, San Juan - Argentina" dated March 25, 2011 which can be found on Yamana Gold's profile on www.sedar.com. About Premier Gold Mines Limited and Premier Royalty Corporation Premier Royalty Corporation is a wholly-owned subsidiary of Premier Gold Mines Limited, one of North America's leading exploration and development companies with a high-quality pipeline of projects focused in proven, safe and accessible mining jurisdictions in Canada and the United States. Premier's portfolio includes significant assets in world class gold mining districts such as Red Lake, Musselwhite and Geraldton in Ontario and the Carlin Trend in Nevada. Premier believes that consolidating existing royalties owned by Premier Gold combined with acquisition of other high quality cash flowing royalty assets into Premier Royalty Corporation can form the basis of a transaction that is value accretive to Premier shareholders. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements about strategic plans, including the closing of the acquisition of the Royalty, a going public transaction involving Premier Royalty, Premier issuing the bridge loan to Premier Royalty and future acquisitions of high quality cash flowing royalty assets into Premier Royalty. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information, including the risks identified in Premier's annual information form under the heading "Risk Factors". There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. Premier disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. Ewan Downie, President & CEO Premier Gold Mines Limited Abraham Drost, P.Geo., Chairman Premier Royalty Corporation Phone: 807-346-1390 Fax: 807-346-0100 e-mail:email@example.com Web Site:www.premiergoldmines.com To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2012/24/c2270.html CO: Premier Gold Mines Limited ST: Ontario NI: MNG FIN ORDER -0- May/24/2012 16:04 GMT
Premier Announces Additional Cash-Flowing Royalty Purchase Agreement by its Subsidiary Premier Royalty Corp.
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